72 CHAPTER 3


higher food prices (Warr 2008). Moreover, changes in rural poverty are some- times larger than those in urban poverty, especially in Africa. In Zambia, for example, Ivanic and Martin (2008) estimate that the incidence of rural poverty increases three times as much as urban poverty, which is surprising. Is it possible that these surveys overestimate net food consumers? Aksoy and Isik-Dikmelik (2008) also analyze household surveys (including some of the surveys analyzed by Ivanic and Martin [2008]) and conclude that (i) although most poor households are net food buyers, almost 50 percent are marginal net buyers and (ii) net buyers typically have higher average incomes than net food sellers in eight of the nine countries surveyed, so that a rise in food prices would generally have progressive effects on income distribu- tion. Another explanation for the high impacts on rural poverty found in Ivanic and Martin (2008) may be related to measurement error. Household surveys may generally underestimate the degree to which rural households are net sellers of food, because the consumption side of household accounts is generally better measured than the production side (Cudjoe, Breisinger, and Diao 2008).6 For similar reasons, household income in rural regions may not be as well measured as it is in urban regions. Hence, the Ivanic and Martin (2008) and Wodon et al. (2008) studies may overestimate the impact of price rises on rural poverty.


5. Excluding oil prices. None of these papers considers rising oil prices (or fer- tilizer prices) as a simultaneous shock to income and revenue streams. This omission is significant, because oil prices have increased more than food prices, oil prices have larger and more pervasive impacts on exports, and oil prices affect prices of a number of other goods. The study of Mozambique by Arndt et al. (2008), for example, finds that rising fuel prices induce much larger increases in poverty than do rising food prices. Passa Orio and Wodon (2008) estimate the longer term impact of specific commodity price spikes on the price of other commodities by using a social accounting matrix multiplier. They find that indirect effects are significantly larger for oil than they are for food in three of eight countries sampled.


6. Excluding broader economic growth. None of these studies factor in strong economic growth, which characterizes several developing countries that have been benefiting from strong commodity prices.


7. Poverty lines. Finally, there is the choice of poverty lines; specifically, whether to use a national or an international measure (for example, US$1


6 We thank Xinshen Diao for this astute comment. The specific argument is that microsurveys are more regularly updated on the consumption side; production—being largely seasonal—is only measured at distant intervals. It is sometimes argued that household income is also under- estimated in these surveys.


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